Generating cost model values

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Use the cost model generator wizard to calculate and apply cost values for stockout costs, holding costs, and purchase order line costs.

Before you begin

Before you begin:

  • Ensure that the standard cost model definition is configured for all cost model fields.
  • Gather accurate expense data for your organization to complete the questionnaire.
  • If generating stockout costs for a non-USD location, obtain the current exchange rate to USD.
  • Plan to run the generator just before an end-of-month (EOM) refresh for optimal results.

About this task

The cost model generator uses a three-step wizard to guide you through the process of generating cost values. You can generate values for one or all cost field types in a single session.

Important: The generated values overwrite existing cost model values. Review the generated values carefully before applying them.

Procedure

  1. From the navigation menu, click Administration > Cost model > Cost model generator.
    The cost model generator wizard opens to the Field selection step.
  2. In the Location field, select the location for which you want to generate cost values.
    All generated costs are applied to the selected location.
  3. In the Cost fields section, select cost field type to generate:
    • Stockout cost: Generates stockout cost values based on industry and risk scale.
    • Holding cost: Calculates holding costs percentage based on your organization's expenses.
    • Purchase order line costs: Calculates purchase order line costs based on purchasing expenses.
  4. Click Next.
    The Questionnaire step displays questions specific to the cost field types you selected.
  5. Complete the questionnaire by providing accurate information for your organization:
    1. For stockout costs, select the industry and risk scale, or choose Custom to provide your own starting value.
      If the location currency is not USD, provide the exchange rate to USD.
    2. For holding costs and purchase order line costs, answer all expense-related questions as accurately as possible.
      Some questions impact both purchasing and holding costs. If you change a shared value, the field values in the other cost type are updated, but you must manually recalculate if needed.
  6. Click Next.
    The Cost review step displays the generated cost values.
  7. Review the generated cost values to ensure they are appropriate for your organization.
    If the values are not satisfactory, click Cancel to exit without applying changes, or click the back button to modify your questionnaire responses.
  8. Click Apply to save the generated cost values to the cost model.
    The system applies the new cost values to the selected location, overwriting any existing values.
  9. If you generated purchase order line costs, manually add the generated values to the purchase order line cost data enrichment task (DET).

Results

The cost model generator applies the new cost values to the selected location. If you run the generator and update values just before an EOM refresh, all items are automatically recalculated with the new values during the refresh. Otherwise, all items need to be manually recalculated to use the new cost model field values.

What to do next

Monitor the EOM refresh to verify that the new cost values are applied correctly to all items.